Ben Graham

As part of my Mastermind Value Investing Course, I ask students to watch the following video created by ‘The Heilbrunn Centre for Graham and Dodd Investing’ of Columbia Business School, where Benjamin Graham taught value investing in the late 1920s.

This video showcases Graham giving a lecture, and also his students’ views on the legacy of this great man whom the world now knows as the ‘Father of Value Investing’.

My exercise for Mastermind students is to watch the complete video and share the “one” big idea from it that inspires them the most from Graham’s teachings or from what his students say of their teacher.

In June 1955, Graham gave an interview on the basics of handling money. Almost 60 years have passed since then, but a large number of investing ideas that Graham talked about then, remain valid to this day.

It was sometime in 2005 when a close friend of mine gifted me Ben Graham’s The Intelligent Investor, knowing that I was working as a stock analyst and aspired to become a sensible investor (aspirations are always sensible, you see).

“Is this a good book?” I asked him.

“Seek for yourself,” he told me.

I read through the first few pages of the book, and it didn’t seem to catch hold of my attention, forget captivating me to any extent.

I realized Graham was the teacher of Warren Buffett, whom I’d first read about during my MBA in 2003 (not in the class, but in the library). But the book still did not interest me.

Ben Graham, the Father of Value Investing, writes the following at the start of Chapter 37 of Security Analysis…

In the last six chapters, our attention was devoted to a critical examination of the income account for the purpose of arriving at a fair and informing statement of the results for the period covered.

The second main question confronting the analyst is concerned with the utility of this past record as an indicator of future earnings.

This is at once the most important and the least satisfactory aspect of security analysis. It is the most important because the sole practical value of our laborious study of the past lies in the clue it may offer to the future; it is the least satisfactory because this clue is never thoroughly reliable and it frequently turns out to be quite valueless.

These shortcomings detract seriously from the value of the analyst’s work, but they do not destroy it. The past exhibit remains a sufficiently dependable guide, in a sufficient proportion of cases, to warrant its continued use as the chief point of departure in the valuation and selection of securities.